NEWS FLASH!!!!
Dateline:
28 August 1998: (Hey, peeps, note the date!)
Today the U.S. Dollar broke sharply to the downside, that is it suddenly started losing value. At the EXACT same time the German Mark broke sharply to the upside, suddenly gaining value. So, what does that mean?
Well, the Russian Ruble over the last several months has lost 85% of its value. If you have been watching the news, you know what kind of a problem that has been for the Russians. With this kind of loss of value, what can they do? They need our grain so as to avoid mass starvation this winter and the ONLY thing they really have available in quantity to sell for hard cash is Gold.
The country hardest hit by the devaluation of the Ruble is Germany. They are losing money hand over fist in Russia. So, what can they do?
What really matters to us is how this will affect us and our economy. Bottom line is that today's crash of the dollar probably marks the end of our good economy, and what you are seeing in Russia today is what will be happening here next year in October 1999.
FOOTNOTES: 1. (010505) Since this was originally written many things around the world have changed. First the GUESS that the economy would tank in 1999 was off by a bit. The economy did not start to tank until January of 2000, and until early 2001 most people did not even notice the downturn. Now the 'bad economy' is on everyone's lips. With the NASDAQ stock index down over 60% in the last year, a lot of 'solid' companies are going bankrupt or flirting with bankruptcy. And this is just the TIP of the iceberg. Thousands more are going down the tube. Even automaker Chrysler is having problems. In the Freightliner plant in Portland, Oregon, they have been laying off people with THIRTY (30) years of service because of slow truck sales.
Everything I see points to a massive restructuring of the world economy, vis-a-vis 1929, only much much WORSE, both in the economy AND in its long term effects. In 1929, the economy started tanking in August, AND DID NOT STOP TANKING UNTIL LATE 1934, with a whopping 85% contraction in the economy. Today, I see this economy contracting by 96% (!!!!) over a period of about four years. So far, EVERYTHING (inflation, demand, supply, bankruptcies, stock markets, etc.), seems to stay in lockstep with that observation. When the economy toppled in 1929, so did the whole world, and the misery resulted in the elevation of despots (Hitler, Mussolini, etc.) and ultimately resulted in war. That is where this whole thing is headed, more despots, and more WAR, only this time MUCH WORSE THAN IN THE 30's AND 40's!!!! Better get your house in order - you stand to lose EVERYTHING, possibly even YOUR LIFE.
Second, since this was originally posted, we have seen inflation in the U.S. go out of control. The CPI does not show this even yet, but sooner or later it will. (What good is the CPI if it does not show the real world until months after the fact???) First, gasoline prices took off like a rocket, then energy prices of all kinds followed suit, most newsworthy being the electricity shortage in California. Now many other things are following suit. I notice it most in automotive parts as many parts that I buy and sell have TRIPLED in price in the last 6 months. The general populace is not aware of these price increases yet, but as their cars and truck break down, they will become PAINFULLY aware of them. (If the parts cost in a transmission rebuild go from an average of $400 to $1200, the cost of the average rebuild MUST go from $1600 to $4800!!!!! or the rebuilder WILL go bankrupt!!!!) Those in the automotive industry are already aware of these prices, and those that are smart are raising their prices to compensate. Those that ignore these increasing prices will themselves teeter on the edge of bankruptcy in the next year or so.
What we have now is an anemic economy with inflation out of control. If you want proof, just ask ANYONE that YOU know that is in the automotive industry, like the manufacturers, wrecking yards, automotive repair shops, transmission shops, auto body shops, part suppliers, etc. They will tell you that they are caught between rapidly rising costs and rapidly dropping demand for their services. The bottom line is that unless something happens, and SOON, this inflation is going to DESTROY the automotive industry as we know it.
2. (030118) Today in the automotive industry things are rapidly turning into a major disaster. Around here, the automotive repair market and their suppliers are in the worst depression since 1929, and probably since the beginning of the automotive era. No one is making any money, and shops are going bankrupt almost daily. Not just recently opened shops, but shops with 18 years in the SAME location on MAJOR roadways with over 100,000 vehicles per day passing by their front doors. Granted some of them are closing because of mismanagement, mostly because they did not raise prices fast enough in the last few years, but many are closing because their customer base cannot afford the prices that the shops must have to survive. The only shops that have a chance of surviving relatively unscathed are those with large customer bases of commercial accounts necesary to the functioning of our economy, like electric & telephone companies. And even those automotive shops cannot survive without charging 'ridiculous' prices.